Select carpet backer mesh in the size you want. Mesh comes in a variety of sizes at most craft stores. Most shag rugs are a solid colo, so choose a plain mesh for your rug.
Look for long yarn. Hooking yarns come in different lengths. A longer length will create more of a shag look. If only short lengths are available, buy a durable and sturdy yarn and cut the lengths yourself. This choice allows you more color and texture choices. Find a yarn with the texture you like.
Cut your mesh to the size of rug you want to make using scissors. Add 6 inches to each dimension to give you a margin to finish or seam the rug.
Insert your latch hook tool 3 inches from the top edge and 3 inches from the side edge. Insert the hook under the horizontal cross bar of the mesh and push the hook up so that the latch opens.
Wrap and center your yarn around the tool near the handle. Bring the ends over the horizontal cross bar of the mesh and into the hook. Pull the tool toward you so that the latch closes. Pull the tool back through the same openings in the mesh. Tug on the ends of the yarn to tighten the knot on the mesh. Move the tool toward the center of the rug one mesh opening and repeat.